In its research report, SBI's research department said that ideally government should keep the fiscal deficit numbers constant for the next two years

Union Finance Minister Nirmala Sitharaman will present the full-year Budget on July 5.

Ahead of Budget presentation, the Economic Research Department of State Bank of India (SBI) has urged the government to focus on agriculture, NBFC (non-banking financial company) and MSME (micro, small and medium enterprises) sectors. It also asked the government to emphasize on making country-mandated fiscal rules that are credible and achievable. In its research report, SBI's Economic Research Department said that ideally government should keep the fiscal deficit numbers constant for the next two years. However, sticking to a particular fiscal number is not that important in the current scenario, it said.

According to the SBI report, the government should focus on tweaking the agriculture sector in the upcoming Budget. "A big push to the term loan will boost the agricultural sector. Further, setting up of an Agri-marketing Reforms Council (AMRC) on the lines of the GST council and an exclusive focus on harnessing the rapidly shrinking water resources also deserve higher priority," the report said.

NBFC requires urgent attention in the upcoming Budget. "Till March 2020, Rs 4.75 lakh crore of bonds and papers of NBFC sector are set to mature. Further, most of the NBFC exposure is to the reality sector. Some sort of demand boost for the realty sector, like GST concessions to the buyers and stamp duty rationalization could very well give a flip to the reality sector and can also help solve part of the NBFC quagmire that we are currently in," the research desk said.

In the upcoming Budget, the MSME sector too needs urgent focus. There is a need for amalgamation of CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) and CGFMU (Credit Guarantee Fund for Micro Units), the report said. "This will remove the complexities such as multiple coverage/non-coverage of MSME loans and understanding among field functionaries about various time norms to be adhered to under each guarantee scheme will be eliminated," it noted.

As per SBI's research desk projections, the yield curve may edge lower further. The 10 year G-sec yield is likely to be kept below 7 per cent (now 6.88%). Eventually it may head towards the range of 6.5 per cent to 6.6 per cent. This will be reflecting more of the growth outcomes rather than the government borrowings, the report said.